September 16, 2024 • 47 mins
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Does it make sense for me to put down 30% or even 50% on a home purchase?
2 - How should we go about cutting credit cards from our life without hurting our credit scores?
3 - Is it possible for multiple investing accounts to undercut the impact of compounding on my overall wealth?
4 - Should I be concerned about an unrealized capital gains tax on my 401k?
5 - Will pay-per-mile car insurance actually save me money?
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During this episode we enjoyed a For Foolish Thinking by Burial. And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!
Best friends out!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Had the Money. I'm Joel and I am Matt.
Speaker 2 (00:03):
And today we're answering your listener questions.
Speaker 1 (00:24):
Welcome to Listener Question Monday. Everybody where we have a
chance to hear directly from you via your voice memos.
Thank you to everyone who has previously. Do you know
how many voice memos we've fielded here on the show, Joel?
How many? I don't know, but it is a lot.
Maybe next episode I will look that number up and
cap it for folks, but it definitely is a substantial
(00:46):
number of listeners. But we're gonna hear from a couple
and they are looking for the smart way to cut
up their credit cards, Joel. They might be looking for
a way to simplify their finances. Another listener, he is wondering.
Speaker 2 (00:56):
Asking for like a scissor recommendation, or or if.
Speaker 1 (00:59):
They should put it in the block of ice, which, hey,
I'm not going to knock that, by the way, if
that is a strategy that might work for you, we'll
get to exactly why that might make sense later on.
Speaker 2 (01:08):
I'm going to say I don't know any other brands
besides Fiskers.
Speaker 1 (01:11):
But we've got another listener and he's asking about the
unrealized capital gains tax on his four win k if
that's something that he should start preparing for now. And
another guy he's wondering if it makes sense to put
down more than twenty percent on the home that he's
looking to purchase, maybe thirty percent or even fifty percent
for achiever. So we'll get to those and more during
(01:32):
today's Ask How to Money episode A.
Speaker 2 (01:33):
Right, speaking speaking of over achievers, Matt, my my friend Scott,
neighbor lives around the corner, went over to his house recently.
Speaker 1 (01:39):
He had a little bake.
Speaker 2 (01:40):
Sale his kiddo's. They oh nice selling cookies. He had
homemade strawberry ice cream. It was delicious right on, and
so we supported the neighborhood.
Speaker 1 (01:47):
Very Americana right there. Homemade strawberry ice scree one hundred
percent was a good It was delicious, nice, so good.
Speaker 3 (01:52):
Well.
Speaker 2 (01:53):
The thing I noticed that he pointed out when I
showed up, he knows I like beer. Everybody knows I
like beer. I kind of weird, like a badge of
honor on my body at all times. He has a
kegerator in his garage.
Speaker 1 (02:04):
Nice.
Speaker 2 (02:04):
I didn't ask him about the money saving aspect, of it.
I think it's more the beer loving aspect. The reason
is the reason why he does this. But he got
this antique refrigerator for like very little money, oh.
Speaker 1 (02:14):
Like a fifties kind of with like the big handle,
big latch handle. That's right exactly.
Speaker 2 (02:18):
He drolled a couple holes for some tap handles, and
he's got some ponykegs inside the fridge. When people come over,
it's really easy to pour a pint.
Speaker 1 (02:25):
Did you did you get a point during the big sale?
But I saw him this morning and you said you didn't. No,
I didn't at that time because I was more there
for the sweets. But he was like, come over, have
a beer sometimes. So I think I will partake soon.
But okay, is this something that you are personally interested in?
I don't know.
Speaker 2 (02:39):
Because one, I'm curious about how long is it take
for the beer to go flat. I'm guessing it's months.
I'm guessing you get time.
Speaker 1 (02:44):
I don't know actually, And then okay, I feel as
two beer lovers, I feel like this is that you
and I should should be aware.
Speaker 2 (02:50):
But the other thing I'm curious about is how much
money it saves.
Speaker 3 (02:52):
You know.
Speaker 2 (02:52):
I tried to look this up to see, and it
looks like, depending on obviously the quality of beer you
can get, you say, get Core's Light, yes, and pay
sixty bucks for one of those small kegs and you get.
Speaker 1 (03:03):
Like sixty pints or something.
Speaker 2 (03:05):
I think something like that, Okay, might be paying roughly
a dollar a beer, a little more if you get
something nicer, you might be paying three dollars a beer.
Speaker 1 (03:11):
Yeah. I can't imagine you're doing it much from a
cost saving standpoint. Yeah. Yeah. So the reason I asked
if you were interested is because I feel like like
older yeah right, I should say younger Matt. Like back
in the day, I would hear this and think, oh yeah,
I totally want to have a Cagraator. But if you
think about it, it's mostly well, first of all, you
cut down on a variety of beer that you're drinking
because you're the biggest downside. You're committing full on to
(03:33):
just drinking the same beer for who knows how long,
ye guess party and try all the beers exactly. Imagine
if instead of having different craft beers on the show,
if instead we built a Cagreator and we're like all right,
drinking some Newcastle again, that would be nearly as fun. Yeah,
but what is fun, I guess is the ability to
offer somebody some beer on draft, because that's just I
(03:54):
don't know, that's cool. Yeah, if you're like hanging out,
he's got it set up there in his garage. Does
he have like a dude garage. Does he have a
couch in there, like a place to sit and see
a couch?
Speaker 2 (04:02):
But he might have moved it out for the bake sale.
I don't know, but I'll tell you next time I
go over there.
Speaker 1 (04:06):
Sounds like fun. Speaking of beer, you and I are
enjoying the eleventh Passing. This is okay. So actually it
says for foolish thinking? Is that what it's called it?
The eleventh passing? You can't tell. With some of the
Burial labels, it's really hard to know. Difficult, but either way,
this is a stout by Burial, and based on the
fact that it says the eleventh passing and at the
bottom that says ano x one, so Roman numerals eleven.
(04:30):
I think this is their eleventh anniversary celebration beer.
Speaker 2 (04:33):
And they make good beers in general, but usually the
anniversary beers are taken up a notch, so this one
definitely is excited to drink this one.
Speaker 1 (04:40):
Share our thoughts at the end.
Speaker 2 (04:41):
Exactly all right, Matt, let's get to listener questions. If
you have a money question, we would love to hear
from you. The crazier the better. The way to do
that is just to record a voice memo, state your name,
where you live at the beginning of it, then send
it our way via email, or you can go to
hot money dot com slash ask for the simple directions. Matt,
let's get to a question about how much this listener
(05:02):
should be putting down on a home purchase.
Speaker 3 (05:04):
Hey, what's going on, Matt and Joel. My name is
TJ and I'm sending this voice message in from Sacramento, California.
I'm a big fan of the podcast. I've been listening
since the beginning of twenty twenty four and it's definitely
changed my life for the better. So, my wife and
I are currently renters in Sacramento and we're planning on
moving to Albuquerque in the next five years to be
close to the family. We're currently saving twenty six hundred
a month in a high yeal save his account towards
(05:25):
the down payment and the house that we've been looking
at are currently in the low to mid three hundred
thousand dollars range. By the time we're ready to move,
we should have saved up roughly one hundred and fifty
to one hundred and seventy thousand. So my question is,
as first time home buyers, should we put down what
could be a thirty to fifty percent down payment or
should we be more conservative with our money. We're also
budgeting for home repairs, saving up one percent of our
(05:47):
estimated home value yearly, and budgeting towards other aspects of
life separately using a budgeting software. But we just wanting
to reach out and get your guys opinion on it
before we make this next big step. Thanks again for
everything you guys do. A big fan of the podcast,
big fan of craft beer, and I look forward to
here in the next episode.
Speaker 1 (06:04):
All right, TJ, First off, amazing job. I would say
on multiple fronts here. To be able to save as
much money as you are consistently every single month for
this goal just shows an incredible amount of discipline and
getting after it. And I'll also point out that you
are moving from a state that has a higher cost
of living, so California. Is this expensive to live in California,
(06:25):
mass Sacramento is specifically as well, moving to a state,
specifically a town Albuquerque, with significantly lower So I looked
it up. The cost of living in Albuquerque is like,
I think, four percent lower than the national average, whereas
Sacramento is something like twenty percent more. And so that's
such a cheat code, doesn't it to move from it?
So does a really expensive place to a much cheaper
(06:45):
cost of living place, especially if it means being able
to keep your income on a similar trajectory, Yes, you're talking.
You really are talking about bringing massive amounts of money
back in your life. Not that not that I would
convince you or tell anybody that they should move for
financial reasons only, but yeah, it really can make a
big goal. In TJ's case, he said he's got family,
her friends also over there in Albuquerque, so he's got
(07:06):
a whole bunch of folks that know what's going on.
He's got lots of reasons to go there for his
dollar to just go a whole lot further. But also
it doesn't sound like he's looking to expand his price
point because I think a lot of folks they would
take the bigger savings pile as an opportunity to buy
the governor's mansion. Right. But TJ, again, it sounds like
(07:26):
you know, whether you ought to put the full amount
down or not, it sounds like you are prioritizing keeping
your housing costs low. And I think that's just a
recipe for just additional margin in your life, and you're
going to have so much more financial breathing room as
well as future financial success and achieving some of the
different goals that you might set for yourselves.
Speaker 2 (07:43):
Yeah, it makes me think of a recent conversation mat
that we had with Amanda Walt, and she was talking
about she looks at people's budgets all the time on
our Instagram channel, and she said, cars and houses. How
much people are dedicating to those two expenses in their life,
It often tells the tale of how their finances are
going overall.
Speaker 1 (07:58):
That's true.
Speaker 2 (07:58):
So basically, keeping that budge reasonable is going to pay
dividends for years to come. So then that begs the question,
which is what TJ asked, Well, how much of the
money he saved should he put down on the home purchase.
He's going to have at least twenty percent on hand,
which is the minimum we would like for people to
put down. I'm not going to say it's like this
hard and fast rule that you can't put less down.
People do it all the time, and they end up
(08:19):
doing okay putting us down, especially if it's your first
home purchase. I think there is wiggle room there. But
the good thing about having at least twenty percent to
put down is that allows you to qualify for the
best rates in terms, it allows you to avoid PMI
private mortgage insurance, which can be a pesky add on
fee of one hundred bucks and in some circumstances it
(08:39):
could cost hundreds.
Speaker 1 (08:40):
Even of dollars, anywhere between like half a percent to
one and a half percent.
Speaker 2 (08:44):
Yeah, So yeah, being able to avoid that is incredibly nice.
But beyond that, if you put more than twenty percent down,
you're typically not doing yourself any favors. You're not really
bringing down the overall loan amount, you're not really reducing
the interest rate or anything like that. True, so I guess,
and we can talk about the benefits of putting more
(09:04):
than twenty percent down, but the benefits are minimal.
Speaker 1 (09:06):
I'd say they're less. But of course you're gonna you know,
when you put down more, you're gonna pay less and
interest every single month, your monthly payment's gonna be less.
So it's not an unreasonable choice. But I think the
real question is what could you do with that money
were you to not put it down towards that house,
would you be able to use that money better elsewhere?
And the calculations they have changed from let's say the
three percent mortgage days like a decade ago, because it
(09:30):
was certainly I would say it was a no brainer
to take out a thirty year loan back then hold
on to your cash, but the insurance a bit more
nuanced these days, when you've got rates for a thirty
year in like the six and a half percent range.
And this is for folks with solid credit, even more
if you don't have a great credit score. And so
that's just something to consider. And again I will say,
though TJ, he's talking about buying a home five years
(09:51):
from now, so it's just tough to know where rates
are going to go. So that's one of the differences
the market is going to be. What are the rate's
gonna be? Yeah, because if they are, let's say they're
even higher than where they are are currently. We'll shoot,
I would be very tempted to put down a heck
of a lot more towards that home, but if they are,
if we do end up back in the it takes
down to five, four or three percent, Okay, well, there's
(10:11):
going to be absolutely the zero reason to put down
any additional dollars beyond that twenty percent. Yeah, exactly.
Speaker 2 (10:15):
The market and the terms really dictate whether or not
you should be coming to the closing table with even
more of that cash. And once you find this specific
house you want to buy, you'll likely have a good
idea of how much cash you're going to need in
order to bring that house up to your standards. So
it might be three thousand bucks, you might say, listen,
it's only the countertops. That's the only thing we need update.
Other than that, it's perfect. Or it could be thirty
(10:37):
thousand bucks. You know, you might say, we need to
redo all the bathrooms and paint the whole interior to
bring it up to our standards. Unfortunately, you've saved enough
to be able to make that choice and to be
able to pay for those repairs in cash. But either way,
keep the cash on hand for some of those upfront costs,
and then for some of those essentially inevitable costs that
come with buying your own place. I'm guessing that this
(10:57):
home is going to be larger than where you're currently renting,
which likely means spending a bit more on furnishing this
new home as well. And so while your savings account
rate isn't going to be as high, there is some
benefit to that liquidity. It'll help prevent you from taking
on worse kinds of debt in the future.
Speaker 1 (11:14):
Yeah, and you even said the word roal liquidity, Like
basically that's what we're talking about here, because like, even
beyond just looking at the house, having cash in the bank,
especially when rates are solid, it's just going to mean
more flexibility for your life overall, because let's say you
want to switch careers, or let's say that there's two
of y'all who are earning an income right now, but
(11:34):
you want to switch down to just one income. Well,
having that cash in the bank versus essentially pre paying
the mortgage there on your home like that is going
to give you the option to do that. And so
we're actually not sure of how much you're investing. I
don't think DJ mentioned anything about that, but like, you
might be crushing it, but we wouldn't want you forking
over all of your cash towards a down payment if
(11:55):
you aren't getting let's say the full match in your
workplace retirement account, or let's say you're not acting out
your roth IRA. Well, if you're in that kind of position,
obviously we want to get you investing. But I'm guessing,
based on just everything that TJ's got lined up that
he I think he is doing a pretty solid job there,
because it sounds like he's got good financial habits. Yeah, exactly,
he's an amazing job. He's an a killer job saving
(12:16):
for this more immediate goal, and so I've got to
think that he's also thinking long term and he's just like, oh,
of course, fellas, I'm not going to state that because
it's just assumed we all do that, right, And to UTJ,
I would say, yes, it's great that you're doing that,
but no, not everybody does that.
Speaker 2 (12:29):
I think it's important for us to note to Matt
that you know, you and I were not fans of
mortgage debt. We're not like, take on as much as possible.
This is a good thing. It's beneficial for your financial future,
but we also don't consider it bad debt, and so
it's this it kind of inhabits this gray area in
our minds. Although if you're one of those people with
a two point seventy five percent mortgage rate locked in
that you refinanced in two ten years ago, gosh, it's
(12:50):
almost good debt, right because you can make more in
a savings account, in a completely non risky account, which
is incredible as long as you're not tempted. And this
is a really and caveat Matt to fritter away additional
dollars that you don't include in the down payment.
Speaker 1 (13:05):
He's not gonna do that.
Speaker 2 (13:06):
I don't think he's gonna do that there yet. But
even out there, for everyone else out there who's listening,
that is a temptation. Like more cash in the bank account,
it can burn a hole in your pocket and you
might say, all right, well, hey, we hit that mark
putting twenty percent down on the home, and so now
I'm gonna buy a Go Kart for my kid. Well,
I don't know, whatever it is, like, whatever you're interested
in buying, that just kind of well, we've got free
(13:27):
cash hanging out in the savings Account's not allocated for
anything in particular. If that's the case, it would be
better off to put that cash towards the down payment
and have a smaller note every single month.
Speaker 1 (13:37):
Totally understand what you're saying, but like, like reading between
the lines with TJ, there's no way that he's going
to fritter this money. Yeah, like he's talking, like he's looking.
This is the kind of person that is looking five
years into the future and he is currently budgeting for
home repair expenses one percent of the home purchase price already. Yeah,
he's a hyper planner. Yes, And so honestly, DJ, like
I wouldn't say this to many folks, but I would
(13:59):
honestly look to some of the more near term things
that might make your life a little bit more fun
or enjoyable. A go cart, like a go cart for
your kids, or I don't know, for yourself, but they
make it don't go. But like maybe this is thinking
through like different ways you can give your money away,
or spending money on your wife or your partner, or
like spending money on your friends or even on yourself,
(14:21):
because I think if you can maybe and I'm not
talking about going crazy and for most listeners or maybe
I should say for most Americans out there, this is
not the position that they're finding themselves in. But I do,
as I read it between the lines a little bit.
I do see TJ maybe being like slightly more tight
fisted with his money and incredibly disciplined, and.
Speaker 2 (14:39):
Really are reading between the tea leaves over.
Speaker 1 (14:41):
Yeah, who is planning for home repair expenses five years
in advance like that? This is somebody that has a
game plan. And I love that. But I'm just saying, I.
Speaker 2 (14:50):
Just need you to buy a home these days with
how much you need to say about I mean, it's impressive.
Speaker 1 (14:53):
It's true in that part, it's true, But I'm just
saying I see myself in TJ. And I look back
to when I was younger, and there are certain times
when I know I could have been a little more
generous when it came to some of the things I
may have missed out on, especially maybe when he's younger.
Maybe there are certain experiences that he's not going to
be able to easily accommodate once he moves to Albuquerque
versus right now when he's in California, or things that
he can't do five ten years down the road. Once
(15:15):
he's a little bit older, or maybe once kids are
in the picture, if that's a priority of his.
Speaker 2 (15:19):
So take that trip to Disneyland, is what you're saying.
Speaker 1 (15:22):
Yeah, I don't know, I'm I'm just throwing that out there.
I'm not gonna automatically assume that TJ's not spending money.
Maybe he's making a killer income and he's also spending
his money in a way that's bringing him a lot
of joy. But I just wanted to mention that that's all.
I think.
Speaker 2 (15:35):
Ultimately, when it comes down to it, what you gain
from putting more than twenty percent down on a home
isn't as impressive as what you can do with the
funds if you're more intentional with the money above and
beyond that twenty percent, whether it's saving for unexpected expenses
and repairs, whether it's investing for your future. There are
just better ways to utilize that money. And yeah, maybe
(15:55):
our tune changes if mortgage rates are ten eleven, twelve percent,
but given where they are or where they're at right now,
there's still kind of in that gray middling area. So
put twenty percent down, TJ, find better things to do
with the rest of it. Is kind of our suggestion.
All right, Matt, We've got more to get to on
this episode, including a nuanced question about compounding returns. We'll
get to that and more right after this.
Speaker 1 (16:23):
All right, Joe, we are back from the break in.
Let's hear from a couple who has a credit card question.
Speaker 4 (16:28):
I am Colin and I am Carly, and today we
have two questions. First question, an effort to simplify from
a twelve credit cards to a critical few, including my
oldest cards. Are there any strategies you may have that
limit negative impacts on a credit score?
Speaker 1 (16:43):
Should I just cancel?
Speaker 4 (16:44):
Should I let them close? Naturally? Could the cancelation of
my recent cards actually increase my average credit age and
make it a wash? We'd love to hear your thoughts
more importantly, being avid how to money and poor not
poor fans since episode one. Love to share a beer
at our wedding with you in October.
Speaker 3 (17:03):
Thanks so much, best friends out.
Speaker 1 (17:05):
That was adorable. I love that.
Speaker 2 (17:07):
Yeah uh, and my goodness, thank you for the invite
to your wedding.
Speaker 1 (17:10):
That means a lot.
Speaker 2 (17:12):
Joel's going to be there. I wish, I really wish,
I wish, I wish we could be there I feel
like I hate that you said that, because now it
makes me feel for just plit a second, like a
jerk for not being there.
Speaker 1 (17:19):
Yeah.
Speaker 2 (17:20):
Yeah, no, Colin, we looked at our calendar. Not quite
possible to make it. And Matt, this was a legitimate invite,
not just they's literally real week sent.
Speaker 1 (17:28):
We got the stage story. Those things cost money, so
we appreciate the fact.
Speaker 2 (17:32):
That you have to account for every person who comes
to your wedding. By the way, when it comes to
feeding them, and I'm not sure if I think they're serving.
I think they said one of the groomsmen is making beers.
That's right, he's a homebrewer. They know they invite us,
we're going to drink a few beers. So we seriously
thank you so much for inviting us to your wedding.
I wish we could make it and yeah, alas can't
make it work. And we wish the best to you
(17:54):
guys on your wedding day and moving forward. And we'll
send you, guys a couple of pairs of how to
money socks as a wedding present. Don't know if it's
a great wedding present, but we'll send it anyway.
Speaker 1 (18:02):
I wanted to only send you all one pair of socks,
but then Joel convinced, and I was going to force
all the shy one to share, and it's going to
put your marriage to the test instead of going to
marriage counseling. You say, oh, we listened to how to money,
and we share this one pair of sox. But Joel
talk me out of it. We'll send you guys to but.
Speaker 2 (18:19):
I don't want to like put hurles in their in
the marriage, in the path of their marriage right from
the gig car.
Speaker 1 (18:24):
Yeah, let's talk about credit cards because it sounds like
these two they've been using credit cards to the max,
or maybe not quite to the max.
Speaker 2 (18:31):
Because there are folks are maxing them out.
Speaker 1 (18:33):
But no, no, no, no, not like that they are not
hitting their credit limit. I'm talking about the number of
cards that some folks cycle through, because there's some folks
out there who have not just like a dozen cards,
like Colin and Carly said, but like dozens of credit cards.
Speaker 2 (18:46):
And so were our friend the points guy, Brian Kelly.
Speaker 1 (18:48):
Who did we talk to you at one point that
had like the baseball card collector binder with like the
clear pages with the spots for all the different cards.
He wasn't Brian, but I don't remember somebody I forget
who was uses That's how he keeps up with his
credit cards. How I used to keep track of your
POGs back, which, no, you just put the POGs in
the tube.
Speaker 2 (19:05):
They had the tube, but they also had the similar debase.
Speaker 1 (19:07):
They really yeah, Oh I didn't see that. I never
had that. I thought they did because they had some
cool designs on them. I just had like one or
two good slammers. Well, we ever talked about POGs on
the podcast. Probably the worst toy we had as kids.
Are you kidding? Bogs were way better than pencil fighting?
Looking back?
Speaker 2 (19:22):
I don't think they were looking back, and they were
pretty dumb.
Speaker 1 (19:24):
I feel like whatever part of your brain likes the
gambling aspect of it, like was ticket, like was stimulated
when you're like doing POGs because it kind of has
like this dice element to it.
Speaker 2 (19:34):
It's kind of like the what was it, the modern
version of Jack's I never played that sixties.
Speaker 1 (19:38):
Yes, it kind of was. But we're talking about their
ability to use credit cards in a strategic way, and
I'm totally fine for the reason for reducing the number
of credit cards though, that they have in their arsenal,
because I think, you know, I don't know, maybe playing
the game in a big way like that made sense
for y'all early on. Maybe you don't want the complexity anymore.
Maybe again, you're just looking to streamline your financial life
(19:59):
a little little bit. I can get behind that. But
at the same time, I just don't lend you to
hurt your credit score in the process. Yeah, so yeah,
let kind of get to the heart of the question.
Let's talk about I guess, de leveraging their credit cards
in a wise way.
Speaker 2 (20:12):
I think I think that's a good way to put it, deleveraging,
and it's not because they're trying to pay off credit
card debt or anything like that. It sounds like they've
handled these cards incredibly wisely. They've benefited from the use
of a slew of different credit cards, and we think
that a lot of our listeners can And by the way,
we've got a lot of information up on our site
about the wise use of credit cards, so you can
find out how to money dot com. And typically one
(20:33):
of the things you'll find there if you're looking around,
is that we're not fans of closing credit cards, and
so this question is something we would typically warn people
against doing. Matt, you mentioned the simplification, and I get
kind of the desire for that, But the only meaningful
benefit for you in elimitting a credit card from your
life typically is just getting rid of the temptation to
(20:54):
use a credit card when you can't control your spending.
In that case, yes, do whatever it takes, because spending
in a way that you can't control is so bad
for your finances that we want you to avoid that completely.
Another one I guess is to get rid of an
annual fee, but you can often just ask their credit
card company to move you to a card that doesn't
have an annual fee. They can downgrade you. Essentially that
(21:16):
saves yourself money every single year while keeping that credit
card line open, which means no damage to your credit score,
which we're fans of. And so I just want to
note that your credit score, it might get dinged here
while you're closing some of these accounts, so be ready
for that and know that that is a potential downside
of closing some of these credit cards. And depending on
your current score and your near term credit needs. You're
(21:37):
getting married, are you going to be buying a home,
buying a new car, or something like that. Then I
would say hold off on closing any of your credit
lines because the downside and the higher interest rate, the
worst terms attached to that financing is probably not going
to make up for the fact that you've just simplified
your credit cards a little bit.
Speaker 1 (21:53):
That's true. Yeah, okay, So one thing Colin mentioned that's
really smart is keeping his oldest cards, which is totally clutch.
And that's because the length of your credit history it
is one of the main factors in your credit score,
and so it would cause even more pain to close
a card that was open, let's say for ten or
fifteen years, then to just close one that, let's say
that you open during the pandemic something like that. So
(22:14):
prioritize keeping those older lines of credit around, and then
the process for going about closing these things do them gradually,
like do them over time, because if you close a
bunch let's say, in a single day, well that's going
to lead to a dramatic reduction in your overall credit
utilization ratio or rate, which is another important component of
your credit score. That map the credit utilization rate. Essentially,
(22:35):
you want to be able to have a lot of
credit that's offered to you, but you don't want to
use anywhere close to the amount of credit that's offered
to you. And so by reducing that upper limit, right
like the upper number, it effectively increases the ratio of
the amount of charges that you actually do have on
those credit card.
Speaker 2 (22:50):
It's kind of convoluted, and it feels like something is
being put in the way of our feet to trip
us up. But that's exactly how it works and makes
sense though.
Speaker 1 (22:59):
Like if you like, I like to think about it
like a stereo, Like if you know that you always
want to blash your stereo at like seven, Well you
don't want your syria to only go up to eight, right,
but like you would have stereo that goes up to
like eleven, like spinal tap. Yeah, well that's the truth.
Speaker 2 (23:13):
So the high your credit limit and the less you
use of that credit limit, the better off you're going
to be when it comes to your credit score. So yes,
keep that in mind. And also I think it's important
to note, Matt, so when it comes to closing credit cards,
don't forget to use any rewards that you've got left
before you close those accounts. It depends on the specific card,
but basically you're going to lose those rewards if you
(23:35):
close the card. So American Express points are typically forfeited immediately,
same with Capital One unless you transfer them ahead of time,
so be sure to do that. Other issuers like Chase
offer a thirty day grace period. City I think actually
offers a ninety day grace period to use any points
to you have accrued, So give it. How many cards
you've got, My guess is you've got some sweet point
(23:56):
balance is racked up. Don't close any of those accounts
without having a plan to use or to transfer those points,
because those can be valuable Matt. That can mean a
couple nights to free hotel stay, maybe some free airfare.
Speaker 1 (24:08):
Although when it comes to different airlines and the different carriers,
the points typically don't expire. So some of the better
I know, the better airlines, so Delta are certainly Southwest obviously,
but then United their points never expire. American airlines they've
got some stipulations, and then like the lesser carriers like Frontier,
of course they've got even more stipulations. I think that
(24:30):
you've only got like six months or six or twelve
months before you have to. There needs to be some
activity there, otherwise you're gonna lose those.
Speaker 2 (24:36):
I think with Frontier, if you submit to a physical beating,
they still allow you to use those points. That just
sounds like a policy they would have. Don't quote me
on that, but.
Speaker 1 (24:43):
Yeah, as long as you're with some of the better
airlines here in the US, you should be totally fine
when it comes to airline miles.
Speaker 2 (24:49):
So basically, I'm just saying, log into that account, be
cognizant of what rewards you have. If and even if
you're going to get an inferior transfer, I'm turning those
rewards points into cash. Do that if you're intent on
closing that credit card anyway, because better to get something.
Speaker 1 (25:04):
Rather than nothing. And again, there's honestly no harm in
just keeping those credit cards around that don't come with
an annual fee. I think that's just the best way
overall to keep your credit score elevated, especially y'all are
starting your life out together. Maybe that means a new
you know, home purchase here in the near future, or
even just renting map even just renting right That credit
matters so many different implications, but you can do minimal
damage to their credit score, and also simplify your credit
(25:26):
card holdings if you close the right cards and just
do so slowly over time. And actually he mentioned just
kind of letting them sort of close naturally over time,
like if they just slowly like die off. I kind
of like that strategy as well. But just make sure
to keep the cards that you've had the longest around,
keep those active, and keep your credit utilization below that
all important thirty percent mark. And also, Carly Colin, congrats
(25:49):
to you both on getting hitched.
Speaker 2 (25:51):
Yeah, wish we could be there. Wish mac coun perform
the ceremony. You've never done one of those, Matt, but
I would love to see it someday, someday, someday. All right,
let's get to the next question, Matt. This one is
about compounding, and this listener is wondering if there's a
way he can screw up that process.
Speaker 5 (26:07):
Hey, guys, this is Stephen Indy got a question for
you regarding compound interest and how it might relate to
four one k's. The question was actually triggered by your
discussion with Ed Slott. A little background. My wife and
I have over eight hundred thousand in individual traditional for
one k's, and at this point it seems like the
(26:28):
values are being largely driven by the fluctuations of the
market opposed to our individual contributions, which has been considering
halting contributions to the traditional four one k's and actually
transitioning future contributions to ROTH four one k's instead, starting
in twenty twenty five. Just to be clear, I don't
(26:49):
want to rule any money over. It would be only
new contributions that would be going into the ross, and
all the balance that is in the traditionals would remain.
My question is would fun only all future contributions into
the ROTH four one case lessen the possible impact compounding
interest will have on our combined accounts. I imagine most
(27:09):
of us have seen the graphs depicting how the effects
of compounding rocket up and to the right as our
balances get exceedingly larger. So my concern is that since
our ross would be starting at zero, we would be
limiting the benefits the compounding could have provided have we
continued to contribute fully to our traditional four to one case.
(27:29):
To be clear, I'm not asking if you think switching
to a ROTH from the traditional is preferable. I'm simply
curious if this decision would lessen our ability to benefit
from compound interest. Thanks fellas, keep up the great work
and I love your show, Steven, Indy bye.
Speaker 1 (27:47):
So did he say that they have him and his
wife have over eight hundred thousand in which I will
say he said to individual four to one k's, which
confused me for a second because I thought he's going
to start talking about individual retirement accounts, but he's talking
about four one tis the fact that I guess him
and his wife both have for one k's that have
a significant amount of money there in there, which is
really impressive.
Speaker 2 (28:07):
Yeah, and Steve didn't mention how old they are, and
I couldn't tell from his voice. I couldn't tell if
he's like twenty six or if he's like forty six.
I'm guessing he's not twenty six because it'd be practically
impossible to amass that much money in a pour on
k over that period of time.
Speaker 1 (28:19):
Steve is ageless, that is what you're saying, Yeah, an
age of four.
Speaker 2 (28:21):
Well, we just talked Matt about four to one k
millionaires and how it takes about eighteen years if you're
maxing out those accounts to become a four to one
K millionaire. So my guess is, you know, Steve started early,
he went hard, and now he's reaping the rewards because
he's almost at that point.
Speaker 1 (28:35):
Yeah, and I will say, Steve, I love that you're
planning to prioritize those Roth contributions moving forward, because Ed
Slott he's all about it and sorrow. We will make
sure to link to that episode in the show notes.
But that'll offer you some of that tax diversification there
in the future, and you're going to have less of
a essentially that ticking time bomb on your hands. But
that's not your question. What you're talking about is when
(28:55):
it comes to compounding, you want to know if by
moving starting a new account starting at Z or if
you're going to be missing out not at all. And
so let's maybe illustrate this with an example here. Let's
say you've got an account with eight hundred thousand dollars
in it. Let's say you also have another account with
two hundred thousand dollars in it. Sounds like a total
of a million right there. There you go. And then
let's say both of those accounts doubled after seven years,
(29:18):
which is actually that's roughly which you can't expect. Typically,
if that was the case, you would have one point
six million on hand and four hundred thousand respectively for
a total of what two million dollars. Well, if you
had just one account with one million dollars in it
basically got the same starting point, and then that doubled,
well you would also have two million dollars. So what
we're highlighting here is that when you have multiple you
(29:40):
could have one hundred accounts with ten thousand dollars in it.
Do I do my math right? Yeah? And it would
The compounding would still be the same. It doesn't matter
how many times you slice and dice it. It's same
with think a pizza. You can cut it into eight slicus. Yeah,
you can cut it into sixteen, you can even cut
it into thirty two, but it's still the same amount
of pizza overall. And although the pizza's not growing, I
guess in this example, but your retirement accounts are. So
(30:02):
Basically what you're alluding to, Matt here is that the
power of compounding.
Speaker 2 (30:05):
It's not about having everything in one account exactly, It's
about having more dollars at use inside of those investments
to grow for your future. And yes, I think having
fewer accounts can be helpful. Well, that can be helpful
from a simplification process, although it's also not necessary.
Speaker 1 (30:21):
It's all about it all.
Speaker 2 (30:23):
Comes down to having more total dollars growing on your behalf,
and then every time those dollars grow, you've got more
dollars at work for you. And so essentially, no matter
how those dollars are sliced up, the math is the same,
no matter how investments get divided amongst different accounts. So
we would say, yeah, pivot to making roth contributions. That
sound from a tax perspective, it's also sound from a
(30:45):
growth perspective, a compounding returns perspective.
Speaker 1 (30:47):
So I think maybe what's at the heart of the
issue here is he even mentioned this in his question
right where he said that it seems like the majority
of his growth is coming from the fluctuations in the market,
because what he's highlighting here is the fact that well,
what I'm adding to my accounts that really it almost
seems like it has no bearing on the growth or
my total dollar amount that's in there. Yes, one percent,
(31:09):
and so that's where you want to be exactly. I
understand what you're getting at, which is that, well, by
starting with a new account, it seems like there's going
to be less compounding going on. Well, yes, that's true
in that specific account, but we're not talking about that
specific account. We're talking about the total number of dollars
that you have overall, your your investments overall, and so
just keep that in mind because it's all and here's
(31:29):
something else this. I feel like there's a chance here
to play this little psychological trick on yourself, because there
might be a temptation to say, well, why should I
contribute to my four one K? Why should I continue
to invest in my IRA? It hardly does anything at
all to my overall investment amount, and so there could
be a temptation to kind of like let off the
gas a little bit. And that's fine if you got
other goals in life. But what if you instead you said, well,
(31:53):
I want to continue to invest, and I want to
trick myself into thinking I'm having more of an impact
on my overall net worth than I'm actually having. Go
ahead and open separate account, because you're going to see
it go from zero dollars to seven thousand dollars and
the next year you're gonna double that by taking it
from seven to fourteen by your contributions.
Speaker 2 (32:09):
Kind of feels like you're starting from scratch, and I agree's.
Speaker 1 (32:12):
Essentially like you're giving yourself more agency on autonomy over
your overall wealth, when in reality, the dollar amount isn't
the same had you continue to invest that within your
four one K, but the ability, right it is the same. Yeah, Yeah,
but it feels different, Yeah, because you see like the
needle move a little bit more in that specific account.
Speaker 2 (32:29):
And we know howslan psychology is to our ability to
do the right thing right.
Speaker 1 (32:33):
So theoretically this makes sense. I've never tried this, but Steve,
maybe give it a shot and let us know how
this impacts you from a psychological standpoint.
Speaker 2 (32:40):
Yeah, I think in so many ways, pivoting to the
wroth over the traditional right now makes a whole lot
of makes a whole lot of sense for Steve, and
he should put his his fears aside, because no compounding
is going to work the same way, whether you continue
to invest in the same account you've been investing in,
or whether you're gonna move and pivot into a wroth.
And we think there are a lot of benefits of
doing a WROTH. I guess I want to throw this
(33:00):
out there, even tho I think this is highly unlikely.
The only difference you might potentially find, but I think
this is rare is you might get charged a higher
fee for having less money in a particular account. Like
sometimes there are price breaks that a financial advisor might offer,
for instance, if you have over a million dollars in
a single account, but typically that's even that's assets under management,
so it's not about just the single account. It's about
(33:22):
all the money that they're overseeing. But yeah, it's not
like you're going to get a better expense ratio with
Vanguard or Fidelity for having more money with them. Anybody
can get that point oh three percent fee. You don't
have to be special, high income earner, massive investor in
order to get the benefits.
Speaker 1 (33:38):
You're democratized. We all get it. Yeah, So I don't know,
but I'm still thinking about the thing that I mentioned this, Steve.
I feel like there's a way for you to Like,
I just thought of another way to think about it,
which is, like those dollars that you're contributing, they kind
of feel like a big fish in a little pond, right,
and when you talk to people about, hey, what does
it feel like to be wealthier or to be rich?
And a lot of times it's relative. It's like it's
always in comparison to those around you. So I don't
(34:00):
know your positioning starting over and having starting from zero
in that roth ira as a negative, I could potentially
see this as a positive.
Speaker 2 (34:07):
Think you feel maybe kind of like Rudy back in
the movie Rudy, like an underdog. You're the scrappy underdog
who finally makes it in as a defensive end.
Speaker 1 (34:16):
Yeah.
Speaker 2 (34:16):
Like, I think the more and more you've been able
to save, the more you see that your contributions make
less and less of an impact on overall returns. Starting
a new account could make you feel like that scrappy
underdog ready to take on the world again.
Speaker 1 (34:28):
So good point. Yeah, all right, Joel, we got more
to get to. We're gonna discuss pay per mile, car
insurance and more. We'll get to that right after this.
Speaker 2 (34:42):
All right, Matt, we're back for the break. It's now
time for the Facebook question of the week. This one
comes from Jeremy on Facebook and he said, what would
an unrealized capital gains tax mean for my four oh
one k, let's.
Speaker 1 (34:54):
Get into it. Time to talk politics, Joel. Let's let's
try to avoid the worst parts of politics. We are,
of course, in a silly season politically, Matt. I don't
want to harp on politicians very much here, but both
sides of the political spectrum lack substantial policy proposals right now.
There's just not much meat on the bone from either candidate.
(35:15):
And this is a fairly new proposal that we've heard
from a minority of politicians from a certain sect, basically
to say, listen, because we're not getting enough tax out
of certain citizens, why don't we tax them for gains
even though they haven't sold shares or positions. I think
the most important thing to note here, and there's a
(35:35):
couple of things that are important for us to talk about,
is to take this with a grain of salt. First off,
because it's not that this proposal couldn't happen. It's just
that it's highly unlikely in the dysfunctional political environment that
we inhabit. So while people might say, hey, this is
something we're in favor of, and they might even mean it,
it doesn't mean that it's going to happen. Yeah, But
(35:55):
let's say an unrealized capital gains tax law where to pass,
which would be in Congress doing actually something productive. What
would happen to your four one K, Jeremy. Well, nothing,
And that's because this proposal is looking to target fewer
than ten thousand people across the US. And that's because
it would only be required for folks who have a
net worth of one hundred million dollars or more. So
(36:17):
there's a lot of folks talking about this. There are
a lot of individuals getting their painties all caught up
in a wad, and there's I don't know, maybe there's
certainly there's is there a chance that Jeremy falls into
this category dual? Maybe in fact he's one of these folks,
But I would say maybe if that were the case,
he probably isn't spending his time over right.
Speaker 2 (36:33):
Listen, how the money yes faced the crew? Well, you
know what it makes me think of You've been called
the John D. Rockefeller of podcasting, and even you aren't
going to get caught up in this law if it
would have passed.
Speaker 1 (36:41):
Right, So I'm not concerned about it at all.
Speaker 2 (36:44):
So, yeah, Jeremy, maybe you're like loaded have massive dollars
on the line, but it's unlikely. If you're asking us
this question, you probably have high price financial advisors and
hopefully they're not stealing from you behind your back.
Speaker 1 (36:56):
But for everybody else out there who's got let's say
five ten, fifteen thousand dollars in a brokerage account, well,
this isn't going to be something that you're going to
have to actually worry about.
Speaker 2 (37:03):
Well, yeah, well you said five ten, fifteen, even if
you have five ten to fifteen million, because they're saying
those people aren't affected either.
Speaker 1 (37:08):
So even if you said those folks are less likely
to be listened to the podcast, so you got fifteen million.
But even if you get to that point, you're like, listen, now,
I got to the five million point. We got some
listeners out there who might already be there, who probably
already are there, And we've got other listeners who are
well on their way to being a multimillionaire, which is awesome.
That's something worth celebrating. It typically happens over many decades.
But in you make a good point here that this
(37:31):
is all about brokerage accounts, not tax advantaged accounts. So
even if you.
Speaker 2 (37:35):
Were the kind of person who had millions of dollars
in your four one k. It would still remain untouched
even if some sort of unrealized capital gains tax were
to be implemented. And to be honest, this is this
is bad policy. We'd rather see the highest capital gains
tax raised instead, which is another proposal that people on
both sides of the aisle have made to say, listen,
(37:55):
let's make the highest capital gains rate a little more
akin to income tax rates. That I think makes more sense.
But taxing unrealized gains opens up a can of worms.
And then you got to ask the question, well, how's
the government going to handle capital losses in a year
when the stock market goes down or an investment declines
in value. Are they going to reimburse investors in those years?
(38:16):
Chances are no, So this is bad policy, but it's
also unlikely to actually take roots. And even if it
does well, ninety nine point nine percent of pound of
money listeners are going to be completely unaffected. So for you, Jeremy,
I would say these proposals are just more noise in
the new stratosphere that you can safely ignore.
Speaker 1 (38:34):
Nice, all right, we've actually got some time to hear
from another listener. Here's an email from polkit and you wrote,
I recently moved very close to work, and I'm able
to take a bus for the first time in seven
years for a fifteen minute commute to work. I'm talking,
I'm awesome. All these years, my minimum one way commute
has been an hour, so I'm really feeling relaxed about
(38:55):
not having to drive that much for work anymore. I
totally get it. I've been looking into pay per mile
and usage based insurance, but I need your advice on
which one to go for and some good companies that
provide such policies. Here in LA. My annual mileage used
to be around twelve thousand miles, but now it'll be
around three to four thousand miles. I did check in
with my current insurance provider was informed that twelve thousand
miles is the lowest annual mileage they can provide coverage for.
(39:19):
I got some quotes from Progressive All State State Farm.
Their premium is more than what I am currently paying.
There are some companies that show up when I search
Freeway insurance, metro Mile, Nationwide, Smart Miles, but I am
not sure how reliable these companies are. I would love
to hear your thoughts, Joel, what are your thoughts?
Speaker 2 (39:37):
Yeah, I got a few thoughts. First off, can I
just say that bus transportation is underrated?
Speaker 1 (39:43):
Underrated?
Speaker 2 (39:43):
I would love to see more bus transportation in this country.
Makes me think of is it in Colombia? They have
a thriving bus system and you don't think about subway systems, Matt,
How hard they are, how expensive they are to create.
We've got the roads already, Let's just get more people
on b infrastructure is already there. Let's make it more
less expensive.
Speaker 1 (40:03):
It's a part of why light rail always seems I
don't know, you don't want to scoff at it because
it's like, hey, somebody's got a dream and maybe people
will ride it. But it's like, hey, we've already got
the roads, Yes, how do we get more people to
travel via those roads more efficiently? In a bus?
Speaker 2 (40:15):
Think about how many cars it takes off the road
by slamming a much more people into one ride. And
polkit is doing that, It's going to save him money
not just on his car insurance, but on his community
costs of raw and his cost of car ownership. And
it makes so much sense to me that people who
drive less should be able to pay less for insurance, right, Like,
why should the person who drives five thousand miles a
(40:37):
year pay the same as the person who drives fifteen
thousand miles a year. It just doesn't make any sense.
But we've kind of made it one size fits all insurance,
even though Oliver size is fairy.
Speaker 1 (40:47):
You want me to be played Devil's advocate. Sure, Okay,
So I could actually see an argument for someone saying
that it should actually cost more for somebody who drives less,
because insurance is not a cue tael, It's not a consumable.
It's not like you're paying for gasoline, where like the
more you do it, the more you actually consume.
Speaker 2 (41:02):
But the more you drive, the more at risk you
are typically for an accident.
Speaker 1 (41:04):
Statistic Partially, I think, statistically speaking, yes, like people who
drive more are like there is a higher change of
them getting in an accident. But like, practically speaking, I
would dare say that someone who drives less is maybe
a little less experienced on the road versus someone who
drives significantly more. I'm just throwing that out there, Okay,
I can see an argument for I'm not going to
say that if you drive less, actually your premium should
(41:25):
be more expensive. But like, it kind of makes sense
to me why there aren't more folks jumping on this
because it doesn't decline more with how how many fewer miles? Yeah,
because there are other like practically speaking, I do think
that there are other factors at play.
Speaker 2 (41:36):
Well, I will say this, there are companies who do
believe more like I do, and they think that you
should save more if you drive less miles, which is
good to see. Polkit mentioned some of those in his question,
but it's also a relatively new segment of the market
and so you might or might not save money going
with those With those guys, it's worth looking into and
getting quotes. But the amount of money you can save
(41:59):
is tip actually not as much as you would think,
and typically the sub four thousand mileage amount is key
to making pay by the mail. Makes sense, and polkit
fits into that if you're driving much more than that,
you're typically going to find the traditional car insurance. It
still makes the most sense. But I just word of
the wise, Polkit, Yeah, get some get some quotes from
these companies, but be careful and I wouldn't switch unless
(42:22):
it was going to mean substantial savings.
Speaker 1 (42:23):
Yeah, Like, I wouldn't be concerned. Like some of the
companies that are offering these programs, they're legit companies. It's
not like these are new fly by night and around
for like a decade and they actually got I think
they were required recently by Lemonade, which is like a
newer startup. But like all stay nationwide, I'm not worried
about them not necessarily paying out where you defile acclaim. Well,
I think one of the reasons that this is good
to talk through though, is I think there might be
(42:44):
more folks who might qualify for the pay per mile
kind of insurance because of the just working from home. Yeah,
I think there are a lot of folks who would
used to think, well, I'm not I'm not one of
those low mileage gals or fellas. But oh wait a minute.
I used to drive into the office five out of
five days of the week. Now I'm only down to
going in maybe tops two out of five days. Like literally,
(43:05):
you've reduced the miles driven by three fifths. I'm all
for you hopping over there and getting a quote and
seeing what it is that they might charge you. I'm
pointing to the fact that I don't want any stone
to be left unturned here because hey, yes, this did
not used to apply to you, but maybe it applies
to you now. Yeah, if you've changed your habits, oftentimes
you haven't re shopped the things you're paying for. And
you're right, man, a lot of people have changed their
driving habits, and so it's worth at least looking into
(43:27):
and saying, well, how much i've been paying for car insurance? Yeah,
and yeah, shop with the pay by the mile companies,
but also shop with the traditional insurance companies. I would
kind of I think you said it perfectly, leave no
stone unturned when you're when you're doing the shopping. We
just want folks to be open minded because I think
oftentimes so folks can get locked into a way of
thinking and you identify with like, well, I'm just I've
always got the traditional car insurance. Well maybe that's not
(43:49):
something that you need anymore. Maybe hey, maybe you don't
even need a car anymore. Maybe this is something that
you can completely cut from your life. Because I think
it's a really important point too. There's like this threshold
of like, well, I'm actually if I just cut the
miles driven by a little bit more. Well, I can
just rely on Uber or Lyft, maybe I can buy
or whatever. Like, yeah, are actually ways to get around? Yeah,
there are just.
Speaker 2 (44:09):
So many other options out if you reduce your driving enough,
it makes sense to not have a car the world.
You're talking about thousands and thousands of dollars in depreciation
costs and insurance costs and gas costs, I mean all
this stuff, And so then it makes ride share and
rental cars feel like a drop in the bucket compared
to what you were spending. So I think that's another
important point, Polkit like, yeah, you're taking the bus, you're
(44:30):
closer to work, which is awesome, and yeah, you still
need a car on occasion, But are there other ways
to get around than having your own car, Because that
could save you even more money and just means less hassle. Hey,
guess what, you never got to go to the mechanic again,
that car that you're riding around in, it's somebody else's
problem of something breaks, So at.
Speaker 1 (44:45):
Least at least consider that. I think that's totally worth
considering it. Privacy, that's the only other concern because with
a lot of these companies, you have to plug in
the thing in the uh port for them to actually
track your miles, because they don't want you just to say, oh,
I drive a thousand miles a month. Although the ones
that one thousand miles of yeah, although the ones that
don't send you the thing to plug in there. I
saw there's one company and they require you to take
a picture of your odometer to and send I didn't
(45:08):
like at the end of every month, right now, at
the end of every week, which also kind of sounds
like a hassle. But I feel like that that's totally
something that you would do. You're like, it's not the
picture of my phone done. That's easy. I could see
using photoshop to your advantage on that one, Matt, I'm
pretty handy with photo shine. Now that's true. That's cheating, Okay,
don't do it. Just to clarify, I'm not advocating scam
your insurance company at all.
Speaker 2 (45:28):
Dishonest, yes, but these two companies might make sense. I
would if you're gonna save a few bucks, probably not
worth it, and the real money savings might be found
in ditching your car altogether. Now that you've been able
to get those miles down so low. All right, Matt,
let's get back to the beer that we had on
this episode. This one is called the Eleventh Passing. It's
my Burial brewing Company. It is a kitchen sink stout.
(45:50):
What were your thoughts on this one.
Speaker 1 (45:51):
I almost don't know where to start with this because
there are so many different flavors going on. It's got
some nice coffee notes. I'll say. That's like one of
the first things I noticed, and I looked at the bottle.
There's two different types of coffee that they incorporated into
this beer, along with a handful of different like toasted
nuts and vanilla flavoring going on. It's like a ping
pong ball in my mouth. Oh my gosh, dried fruits. Yeah,
this thing is the kitchen sink stout. That's certainly an
(46:14):
app way to put it. They put a lot of
stuff in here. Yeah, but it all melds really nicely together.
I was really good. You mentioned the nuts. It's nutty.
Speaker 2 (46:20):
It's got those toasted macadamia nuts which offer kind of
the sweet nuttiness. It was multifaceted, and it was also
just a big, beastly burly stout. So yeah, I really
I really enjoyed this one. You expect a lot from
Burial in general, but when they come up with like
an anniversary stout, you expected to be next level and
this one.
Speaker 1 (46:39):
Was all right, well, that's gonna be it for this episode.
You can find our show notes up on the website
at howtomoney dot com, where we'll make sure to link
to we mentioned I think at least two previous episodes,
two previous interviews ed Slott as well as Amanda Wolf
during our episode today. We'll link to those as well
as different resources like our credit card tool that's how
toomoney dot com forward slash credit card in order to
(47:01):
find a card that's going to work the best for you,
and how it is that you spend your money and
what it is some of the different rewards that you're
gunning for. So let's go ahead to wrap this up
until next time, Buddy, best Friends Out, Best Friends Out,
Welcome to Had the Money. I'm Joel and I am Matt.
Speaker 2 (00:03):
And today we're answering your listener questions.
Speaker 1 (00:24):
Welcome to Listener Question Monday. Everybody where we have a
chance to hear directly from you via your voice memos.
Thank you to everyone who has previously. Do you know
how many voice memos we've fielded here on the show, Joel?
How many? I don't know, but it is a lot.
Maybe next episode I will look that number up and
cap it for folks, but it definitely is a substantial
(00:46):
number of listeners. But we're gonna hear from a couple
and they are looking for the smart way to cut
up their credit cards, Joel. They might be looking for
a way to simplify their finances. Another listener, he is wondering.
Speaker 2 (00:56):
Asking for like a scissor recommendation, or or if.
Speaker 1 (00:59):
They should put it in the block of ice, which, hey,
I'm not going to knock that, by the way, if
that is a strategy that might work for you, we'll
get to exactly why that might make sense later on.
Speaker 2 (01:08):
I'm going to say I don't know any other brands
besides Fiskers.
Speaker 1 (01:11):
But we've got another listener and he's asking about the
unrealized capital gains tax on his four win k if
that's something that he should start preparing for now. And
another guy he's wondering if it makes sense to put
down more than twenty percent on the home that he's
looking to purchase, maybe thirty percent or even fifty percent
for achiever. So we'll get to those and more during
(01:32):
today's Ask How to Money episode A.
Speaker 2 (01:33):
Right, speaking speaking of over achievers, Matt, my my friend Scott,
neighbor lives around the corner, went over to his house recently.
Speaker 1 (01:39):
He had a little bake.
Speaker 2 (01:40):
Sale his kiddo's. They oh nice selling cookies. He had
homemade strawberry ice cream. It was delicious right on, and
so we supported the neighborhood.
Speaker 1 (01:47):
Very Americana right there. Homemade strawberry ice scree one hundred
percent was a good It was delicious, nice, so good.
Speaker 3 (01:52):
Well.
Speaker 2 (01:53):
The thing I noticed that he pointed out when I
showed up, he knows I like beer. Everybody knows I
like beer. I kind of weird, like a badge of
honor on my body at all times. He has a
kegerator in his garage.
Speaker 1 (02:04):
Nice.
Speaker 2 (02:04):
I didn't ask him about the money saving aspect, of it.
I think it's more the beer loving aspect. The reason
is the reason why he does this. But he got
this antique refrigerator for like very little money, oh.
Speaker 1 (02:14):
Like a fifties kind of with like the big handle,
big latch handle. That's right exactly.
Speaker 2 (02:18):
He drolled a couple holes for some tap handles, and
he's got some ponykegs inside the fridge. When people come over,
it's really easy to pour a pint.
Speaker 1 (02:25):
Did you did you get a point during the big sale?
But I saw him this morning and you said you didn't. No,
I didn't at that time because I was more there
for the sweets. But he was like, come over, have
a beer sometimes. So I think I will partake soon.
But okay, is this something that you are personally interested in?
I don't know.
Speaker 2 (02:39):
Because one, I'm curious about how long is it take
for the beer to go flat. I'm guessing it's months.
I'm guessing you get time.
Speaker 1 (02:44):
I don't know actually, And then okay, I feel as
two beer lovers, I feel like this is that you
and I should should be aware.
Speaker 2 (02:50):
But the other thing I'm curious about is how much
money it saves.
Speaker 3 (02:52):
You know.
Speaker 2 (02:52):
I tried to look this up to see, and it
looks like, depending on obviously the quality of beer you
can get, you say, get Core's Light, yes, and pay
sixty bucks for one of those small kegs and you get.
Speaker 1 (03:03):
Like sixty pints or something.
Speaker 2 (03:05):
I think something like that, Okay, might be paying roughly
a dollar a beer, a little more if you get
something nicer, you might be paying three dollars a beer.
Speaker 1 (03:11):
Yeah. I can't imagine you're doing it much from a
cost saving standpoint. Yeah. Yeah. So the reason I asked
if you were interested is because I feel like like
older yeah right, I should say younger Matt. Like back
in the day, I would hear this and think, oh yeah,
I totally want to have a Cagraator. But if you
think about it, it's mostly well, first of all, you
cut down on a variety of beer that you're drinking
because you're the biggest downside. You're committing full on to
(03:33):
just drinking the same beer for who knows how long,
ye guess party and try all the beers exactly. Imagine
if instead of having different craft beers on the show,
if instead we built a Cagreator and we're like all right,
drinking some Newcastle again, that would be nearly as fun. Yeah,
but what is fun, I guess is the ability to
offer somebody some beer on draft, because that's just I
(03:54):
don't know, that's cool. Yeah, if you're like hanging out,
he's got it set up there in his garage. Does
he have like a dude garage. Does he have a
couch in there, like a place to sit and see
a couch?
Speaker 2 (04:02):
But he might have moved it out for the bake sale.
I don't know, but I'll tell you next time I
go over there.
Speaker 1 (04:06):
Sounds like fun. Speaking of beer, you and I are
enjoying the eleventh Passing. This is okay. So actually it
says for foolish thinking? Is that what it's called it?
The eleventh passing? You can't tell. With some of the
Burial labels, it's really hard to know. Difficult, but either way,
this is a stout by Burial, and based on the
fact that it says the eleventh passing and at the
bottom that says ano x one, so Roman numerals eleven.
(04:30):
I think this is their eleventh anniversary celebration beer.
Speaker 2 (04:33):
And they make good beers in general, but usually the
anniversary beers are taken up a notch, so this one
definitely is excited to drink this one.
Speaker 1 (04:40):
Share our thoughts at the end.
Speaker 2 (04:41):
Exactly all right, Matt, let's get to listener questions. If
you have a money question, we would love to hear
from you. The crazier the better. The way to do
that is just to record a voice memo, state your name,
where you live at the beginning of it, then send
it our way via email, or you can go to
hot money dot com slash ask for the simple directions. Matt,
let's get to a question about how much this listener
(05:02):
should be putting down on a home purchase.
Speaker 3 (05:04):
Hey, what's going on, Matt and Joel. My name is
TJ and I'm sending this voice message in from Sacramento, California.
I'm a big fan of the podcast. I've been listening
since the beginning of twenty twenty four and it's definitely
changed my life for the better. So, my wife and
I are currently renters in Sacramento and we're planning on
moving to Albuquerque in the next five years to be
close to the family. We're currently saving twenty six hundred
a month in a high yeal save his account towards
(05:25):
the down payment and the house that we've been looking
at are currently in the low to mid three hundred
thousand dollars range. By the time we're ready to move,
we should have saved up roughly one hundred and fifty
to one hundred and seventy thousand. So my question is,
as first time home buyers, should we put down what
could be a thirty to fifty percent down payment or
should we be more conservative with our money. We're also
budgeting for home repairs, saving up one percent of our
(05:47):
estimated home value yearly, and budgeting towards other aspects of
life separately using a budgeting software. But we just wanting
to reach out and get your guys opinion on it
before we make this next big step. Thanks again for
everything you guys do. A big fan of the podcast,
big fan of craft beer, and I look forward to
here in the next episode.
Speaker 1 (06:04):
All right, TJ, First off, amazing job. I would say
on multiple fronts here. To be able to save as
much money as you are consistently every single month for
this goal just shows an incredible amount of discipline and
getting after it. And I'll also point out that you
are moving from a state that has a higher cost
of living, so California. Is this expensive to live in California,
(06:25):
mass Sacramento is specifically as well, moving to a state,
specifically a town Albuquerque, with significantly lower So I looked
it up. The cost of living in Albuquerque is like,
I think, four percent lower than the national average, whereas
Sacramento is something like twenty percent more. And so that's
such a cheat code, doesn't it to move from it?
So does a really expensive place to a much cheaper
(06:45):
cost of living place, especially if it means being able
to keep your income on a similar trajectory, Yes, you're talking.
You really are talking about bringing massive amounts of money
back in your life. Not that not that I would
convince you or tell anybody that they should move for
financial reasons only, but yeah, it really can make a
big goal. In TJ's case, he said he's got family,
her friends also over there in Albuquerque, so he's got
(07:06):
a whole bunch of folks that know what's going on.
He's got lots of reasons to go there for his
dollar to just go a whole lot further. But also
it doesn't sound like he's looking to expand his price
point because I think a lot of folks they would
take the bigger savings pile as an opportunity to buy
the governor's mansion. Right. But TJ, again, it sounds like
(07:26):
you know, whether you ought to put the full amount
down or not, it sounds like you are prioritizing keeping
your housing costs low. And I think that's just a
recipe for just additional margin in your life, and you're
going to have so much more financial breathing room as
well as future financial success and achieving some of the
different goals that you might set for yourselves.
Speaker 2 (07:43):
Yeah, it makes me think of a recent conversation mat
that we had with Amanda Walt, and she was talking
about she looks at people's budgets all the time on
our Instagram channel, and she said, cars and houses. How
much people are dedicating to those two expenses in their life,
It often tells the tale of how their finances are
going overall.
Speaker 1 (07:58):
That's true.
Speaker 2 (07:58):
So basically, keeping that budge reasonable is going to pay
dividends for years to come. So then that begs the question,
which is what TJ asked, Well, how much of the
money he saved should he put down on the home purchase.
He's going to have at least twenty percent on hand,
which is the minimum we would like for people to
put down. I'm not going to say it's like this
hard and fast rule that you can't put less down.
People do it all the time, and they end up
(08:19):
doing okay putting us down, especially if it's your first
home purchase. I think there is wiggle room there. But
the good thing about having at least twenty percent to
put down is that allows you to qualify for the
best rates in terms, it allows you to avoid PMI
private mortgage insurance, which can be a pesky add on
fee of one hundred bucks and in some circumstances it
(08:39):
could cost hundreds.
Speaker 1 (08:40):
Even of dollars, anywhere between like half a percent to
one and a half percent.
Speaker 2 (08:44):
Yeah, So yeah, being able to avoid that is incredibly nice.
But beyond that, if you put more than twenty percent down,
you're typically not doing yourself any favors. You're not really
bringing down the overall loan amount, you're not really reducing
the interest rate or anything like that. True, so I guess,
and we can talk about the benefits of putting more
(09:04):
than twenty percent down, but the benefits are minimal.
Speaker 1 (09:06):
I'd say they're less. But of course you're gonna you know,
when you put down more, you're gonna pay less and
interest every single month, your monthly payment's gonna be less.
So it's not an unreasonable choice. But I think the
real question is what could you do with that money
were you to not put it down towards that house,
would you be able to use that money better elsewhere?
And the calculations they have changed from let's say the
three percent mortgage days like a decade ago, because it
(09:30):
was certainly I would say it was a no brainer
to take out a thirty year loan back then hold
on to your cash, but the insurance a bit more
nuanced these days, when you've got rates for a thirty
year in like the six and a half percent range.
And this is for folks with solid credit, even more
if you don't have a great credit score. And so
that's just something to consider. And again I will say,
though TJ, he's talking about buying a home five years
(09:51):
from now, so it's just tough to know where rates
are going to go. So that's one of the differences
the market is going to be. What are the rate's
gonna be? Yeah, because if they are, let's say they're
even higher than where they are are currently. We'll shoot,
I would be very tempted to put down a heck
of a lot more towards that home, but if they are,
if we do end up back in the it takes
down to five, four or three percent, Okay, well, there's
(10:11):
going to be absolutely the zero reason to put down
any additional dollars beyond that twenty percent. Yeah, exactly.
Speaker 2 (10:15):
The market and the terms really dictate whether or not
you should be coming to the closing table with even
more of that cash. And once you find this specific
house you want to buy, you'll likely have a good
idea of how much cash you're going to need in
order to bring that house up to your standards. So
it might be three thousand bucks, you might say, listen,
it's only the countertops. That's the only thing we need update.
Other than that, it's perfect. Or it could be thirty
(10:37):
thousand bucks. You know, you might say, we need to
redo all the bathrooms and paint the whole interior to
bring it up to our standards. Unfortunately, you've saved enough
to be able to make that choice and to be
able to pay for those repairs in cash. But either way,
keep the cash on hand for some of those upfront costs,
and then for some of those essentially inevitable costs that
come with buying your own place. I'm guessing that this
(10:57):
home is going to be larger than where you're currently renting,
which likely means spending a bit more on furnishing this
new home as well. And so while your savings account
rate isn't going to be as high, there is some
benefit to that liquidity. It'll help prevent you from taking
on worse kinds of debt in the future.
Speaker 1 (11:14):
Yeah, and you even said the word roal liquidity, Like
basically that's what we're talking about here, because like, even
beyond just looking at the house, having cash in the bank,
especially when rates are solid, it's just going to mean
more flexibility for your life overall, because let's say you
want to switch careers, or let's say that there's two
of y'all who are earning an income right now, but
(11:34):
you want to switch down to just one income. Well,
having that cash in the bank versus essentially pre paying
the mortgage there on your home like that is going
to give you the option to do that. And so
we're actually not sure of how much you're investing. I
don't think DJ mentioned anything about that, but like, you
might be crushing it, but we wouldn't want you forking
over all of your cash towards a down payment if
(11:55):
you aren't getting let's say the full match in your
workplace retirement account, or let's say you're not acting out
your roth IRA. Well, if you're in that kind of position,
obviously we want to get you investing. But I'm guessing,
based on just everything that TJ's got lined up that
he I think he is doing a pretty solid job there,
because it sounds like he's got good financial habits. Yeah, exactly,
he's an amazing job. He's an a killer job saving
(12:16):
for this more immediate goal, and so I've got to
think that he's also thinking long term and he's just like, oh,
of course, fellas, I'm not going to state that because
it's just assumed we all do that, right, And to UTJ,
I would say, yes, it's great that you're doing that,
but no, not everybody does that.
Speaker 2 (12:29):
I think it's important for us to note to Matt
that you know, you and I were not fans of
mortgage debt. We're not like, take on as much as possible.
This is a good thing. It's beneficial for your financial future,
but we also don't consider it bad debt, and so
it's this it kind of inhabits this gray area in
our minds. Although if you're one of those people with
a two point seventy five percent mortgage rate locked in
that you refinanced in two ten years ago, gosh, it's
(12:50):
almost good debt, right because you can make more in
a savings account, in a completely non risky account, which
is incredible as long as you're not tempted. And this
is a really and caveat Matt to fritter away additional
dollars that you don't include in the down payment.
Speaker 1 (13:05):
He's not gonna do that.
Speaker 2 (13:06):
I don't think he's gonna do that there yet. But
even out there, for everyone else out there who's listening,
that is a temptation. Like more cash in the bank account,
it can burn a hole in your pocket and you
might say, all right, well, hey, we hit that mark
putting twenty percent down on the home, and so now
I'm gonna buy a Go Kart for my kid. Well,
I don't know, whatever it is, like, whatever you're interested
in buying, that just kind of well, we've got free
(13:27):
cash hanging out in the savings Account's not allocated for
anything in particular. If that's the case, it would be
better off to put that cash towards the down payment
and have a smaller note every single month.
Speaker 1 (13:37):
Totally understand what you're saying, but like, like reading between
the lines with TJ, there's no way that he's going
to fritter this money. Yeah, like he's talking, like he's looking.
This is the kind of person that is looking five
years into the future and he is currently budgeting for
home repair expenses one percent of the home purchase price already. Yeah,
he's a hyper planner. Yes, And so honestly, DJ, like
I wouldn't say this to many folks, but I would
(13:59):
honestly look to some of the more near term things
that might make your life a little bit more fun
or enjoyable. A go cart, like a go cart for
your kids, or I don't know, for yourself, but they
make it don't go. But like maybe this is thinking
through like different ways you can give your money away,
or spending money on your wife or your partner, or
like spending money on your friends or even on yourself,
(14:21):
because I think if you can maybe and I'm not
talking about going crazy and for most listeners or maybe
I should say for most Americans out there, this is
not the position that they're finding themselves in. But I do,
as I read it between the lines a little bit.
I do see TJ maybe being like slightly more tight
fisted with his money and incredibly disciplined, and.
Speaker 2 (14:39):
Really are reading between the tea leaves over.
Speaker 1 (14:41):
Yeah, who is planning for home repair expenses five years
in advance like that? This is somebody that has a
game plan. And I love that. But I'm just saying, I.
Speaker 2 (14:50):
Just need you to buy a home these days with
how much you need to say about I mean, it's impressive.
Speaker 1 (14:53):
It's true in that part, it's true, But I'm just
saying I see myself in TJ. And I look back
to when I was younger, and there are certain times
when I know I could have been a little more
generous when it came to some of the things I
may have missed out on, especially maybe when he's younger.
Maybe there are certain experiences that he's not going to
be able to easily accommodate once he moves to Albuquerque
versus right now when he's in California, or things that
he can't do five ten years down the road. Once
(15:15):
he's a little bit older, or maybe once kids are
in the picture, if that's a priority of his.
Speaker 2 (15:19):
So take that trip to Disneyland, is what you're saying.
Speaker 1 (15:22):
Yeah, I don't know, I'm I'm just throwing that out there.
I'm not gonna automatically assume that TJ's not spending money.
Maybe he's making a killer income and he's also spending
his money in a way that's bringing him a lot
of joy. But I just wanted to mention that that's all.
I think.
Speaker 2 (15:35):
Ultimately, when it comes down to it, what you gain
from putting more than twenty percent down on a home
isn't as impressive as what you can do with the
funds if you're more intentional with the money above and
beyond that twenty percent, whether it's saving for unexpected expenses
and repairs, whether it's investing for your future. There are
just better ways to utilize that money. And yeah, maybe
(15:55):
our tune changes if mortgage rates are ten eleven, twelve percent,
but given where they are or where they're at right now,
there's still kind of in that gray middling area. So
put twenty percent down, TJ, find better things to do
with the rest of it. Is kind of our suggestion.
All right, Matt, We've got more to get to on
this episode, including a nuanced question about compounding returns. We'll
get to that and more right after this.
Speaker 1 (16:23):
All right, Joe, we are back from the break in.
Let's hear from a couple who has a credit card question.
Speaker 4 (16:28):
I am Colin and I am Carly, and today we
have two questions. First question, an effort to simplify from
a twelve credit cards to a critical few, including my
oldest cards. Are there any strategies you may have that
limit negative impacts on a credit score?
Speaker 1 (16:43):
Should I just cancel?
Speaker 4 (16:44):
Should I let them close? Naturally? Could the cancelation of
my recent cards actually increase my average credit age and
make it a wash? We'd love to hear your thoughts
more importantly, being avid how to money and poor not
poor fans since episode one. Love to share a beer
at our wedding with you in October.
Speaker 3 (17:03):
Thanks so much, best friends out.
Speaker 1 (17:05):
That was adorable. I love that.
Speaker 2 (17:07):
Yeah uh, and my goodness, thank you for the invite
to your wedding.
Speaker 1 (17:10):
That means a lot.
Speaker 2 (17:12):
Joel's going to be there. I wish, I really wish,
I wish, I wish we could be there I feel
like I hate that you said that, because now it
makes me feel for just plit a second, like a
jerk for not being there.
Speaker 1 (17:19):
Yeah.
Speaker 2 (17:20):
Yeah, no, Colin, we looked at our calendar. Not quite
possible to make it. And Matt, this was a legitimate invite,
not just they's literally real week sent.
Speaker 1 (17:28):
We got the stage story. Those things cost money, so
we appreciate the fact.
Speaker 2 (17:32):
That you have to account for every person who comes
to your wedding. By the way, when it comes to
feeding them, and I'm not sure if I think they're serving.
I think they said one of the groomsmen is making beers.
That's right, he's a homebrewer. They know they invite us,
we're going to drink a few beers. So we seriously
thank you so much for inviting us to your wedding.
I wish we could make it and yeah, alas can't
make it work. And we wish the best to you
(17:54):
guys on your wedding day and moving forward. And we'll
send you, guys a couple of pairs of how to
money socks as a wedding present. Don't know if it's
a great wedding present, but we'll send it anyway.
Speaker 1 (18:02):
I wanted to only send you all one pair of socks,
but then Joel convinced, and I was going to force
all the shy one to share, and it's going to
put your marriage to the test instead of going to
marriage counseling. You say, oh, we listened to how to money,
and we share this one pair of sox. But Joel
talk me out of it. We'll send you guys to but.
Speaker 2 (18:19):
I don't want to like put hurles in their in
the marriage, in the path of their marriage right from
the gig car.
Speaker 1 (18:24):
Yeah, let's talk about credit cards because it sounds like
these two they've been using credit cards to the max,
or maybe not quite to the max.
Speaker 2 (18:31):
Because there are folks are maxing them out.
Speaker 1 (18:33):
But no, no, no, no, not like that they are not
hitting their credit limit. I'm talking about the number of
cards that some folks cycle through, because there's some folks
out there who have not just like a dozen cards,
like Colin and Carly said, but like dozens of credit cards.
Speaker 2 (18:46):
And so were our friend the points guy, Brian Kelly.
Speaker 1 (18:48):
Who did we talk to you at one point that
had like the baseball card collector binder with like the
clear pages with the spots for all the different cards.
He wasn't Brian, but I don't remember somebody I forget
who was uses That's how he keeps up with his
credit cards. How I used to keep track of your
POGs back, which, no, you just put the POGs in
the tube.
Speaker 2 (19:05):
They had the tube, but they also had the similar debase.
Speaker 1 (19:07):
They really yeah, Oh I didn't see that. I never
had that. I thought they did because they had some
cool designs on them. I just had like one or
two good slammers. Well, we ever talked about POGs on
the podcast. Probably the worst toy we had as kids.
Are you kidding? Bogs were way better than pencil fighting?
Looking back?
Speaker 2 (19:22):
I don't think they were looking back, and they were
pretty dumb.
Speaker 1 (19:24):
I feel like whatever part of your brain likes the
gambling aspect of it, like was ticket, like was stimulated
when you're like doing POGs because it kind of has
like this dice element to it.
Speaker 2 (19:34):
It's kind of like the what was it, the modern
version of Jack's I never played that sixties.
Speaker 1 (19:38):
Yes, it kind of was. But we're talking about their
ability to use credit cards in a strategic way, and
I'm totally fine for the reason for reducing the number
of credit cards though, that they have in their arsenal,
because I think, you know, I don't know, maybe playing
the game in a big way like that made sense
for y'all early on. Maybe you don't want the complexity anymore.
Maybe again, you're just looking to streamline your financial life
(19:59):
a little little bit. I can get behind that. But
at the same time, I just don't lend you to
hurt your credit score in the process. Yeah, so yeah,
let kind of get to the heart of the question.
Let's talk about I guess, de leveraging their credit cards
in a wise way.
Speaker 2 (20:12):
I think I think that's a good way to put it, deleveraging,
and it's not because they're trying to pay off credit
card debt or anything like that. It sounds like they've
handled these cards incredibly wisely. They've benefited from the use
of a slew of different credit cards, and we think
that a lot of our listeners can And by the way,
we've got a lot of information up on our site
about the wise use of credit cards, so you can
find out how to money dot com. And typically one
(20:33):
of the things you'll find there if you're looking around,
is that we're not fans of closing credit cards, and
so this question is something we would typically warn people
against doing. Matt, you mentioned the simplification, and I get
kind of the desire for that, But the only meaningful
benefit for you in elimitting a credit card from your
life typically is just getting rid of the temptation to
(20:54):
use a credit card when you can't control your spending.
In that case, yes, do whatever it takes, because spending
in a way that you can't control is so bad
for your finances that we want you to avoid that completely.
Another one I guess is to get rid of an
annual fee, but you can often just ask their credit
card company to move you to a card that doesn't
have an annual fee. They can downgrade you. Essentially that
(21:16):
saves yourself money every single year while keeping that credit
card line open, which means no damage to your credit score,
which we're fans of. And so I just want to
note that your credit score, it might get dinged here
while you're closing some of these accounts, so be ready
for that and know that that is a potential downside
of closing some of these credit cards. And depending on
your current score and your near term credit needs. You're
(21:37):
getting married, are you going to be buying a home,
buying a new car, or something like that. Then I
would say hold off on closing any of your credit
lines because the downside and the higher interest rate, the
worst terms attached to that financing is probably not going
to make up for the fact that you've just simplified
your credit cards a little bit.
Speaker 1 (21:53):
That's true. Yeah, okay, So one thing Colin mentioned that's
really smart is keeping his oldest cards, which is totally clutch.
And that's because the length of your credit history it
is one of the main factors in your credit score,
and so it would cause even more pain to close
a card that was open, let's say for ten or
fifteen years, then to just close one that, let's say
that you open during the pandemic something like that. So
(22:14):
prioritize keeping those older lines of credit around, and then
the process for going about closing these things do them gradually,
like do them over time, because if you close a
bunch let's say, in a single day, well that's going
to lead to a dramatic reduction in your overall credit
utilization ratio or rate, which is another important component of
your credit score. That map the credit utilization rate. Essentially,
(22:35):
you want to be able to have a lot of
credit that's offered to you, but you don't want to
use anywhere close to the amount of credit that's offered
to you. And so by reducing that upper limit, right
like the upper number, it effectively increases the ratio of
the amount of charges that you actually do have on
those credit card.
Speaker 2 (22:50):
It's kind of convoluted, and it feels like something is
being put in the way of our feet to trip
us up. But that's exactly how it works and makes
sense though.
Speaker 1 (22:59):
Like if you like, I like to think about it
like a stereo, Like if you know that you always
want to blash your stereo at like seven, Well you
don't want your syria to only go up to eight, right,
but like you would have stereo that goes up to
like eleven, like spinal tap. Yeah, well that's the truth.
Speaker 2 (23:13):
So the high your credit limit and the less you
use of that credit limit, the better off you're going
to be when it comes to your credit score. So yes,
keep that in mind. And also I think it's important
to note, Matt, so when it comes to closing credit cards,
don't forget to use any rewards that you've got left
before you close those accounts. It depends on the specific card,
but basically you're going to lose those rewards if you
(23:35):
close the card. So American Express points are typically forfeited immediately,
same with Capital One unless you transfer them ahead of time,
so be sure to do that. Other issuers like Chase
offer a thirty day grace period. City I think actually
offers a ninety day grace period to use any points
to you have accrued, So give it. How many cards
you've got, My guess is you've got some sweet point
(23:56):
balance is racked up. Don't close any of those accounts
without having a plan to use or to transfer those points,
because those can be valuable Matt. That can mean a
couple nights to free hotel stay, maybe some free airfare.
Speaker 1 (24:08):
Although when it comes to different airlines and the different carriers,
the points typically don't expire. So some of the better
I know, the better airlines, so Delta are certainly Southwest obviously,
but then United their points never expire. American airlines they've
got some stipulations, and then like the lesser carriers like Frontier,
of course they've got even more stipulations. I think that
(24:30):
you've only got like six months or six or twelve
months before you have to. There needs to be some
activity there, otherwise you're gonna lose those.
Speaker 2 (24:36):
I think with Frontier, if you submit to a physical beating,
they still allow you to use those points. That just
sounds like a policy they would have. Don't quote me
on that, but.
Speaker 1 (24:43):
Yeah, as long as you're with some of the better
airlines here in the US, you should be totally fine
when it comes to airline miles.
Speaker 2 (24:49):
So basically, I'm just saying, log into that account, be
cognizant of what rewards you have. If and even if
you're going to get an inferior transfer, I'm turning those
rewards points into cash. Do that if you're intent on
closing that credit card anyway, because better to get something.
Speaker 1 (25:04):
Rather than nothing. And again, there's honestly no harm in
just keeping those credit cards around that don't come with
an annual fee. I think that's just the best way
overall to keep your credit score elevated, especially y'all are
starting your life out together. Maybe that means a new
you know, home purchase here in the near future, or
even just renting map even just renting right That credit
matters so many different implications, but you can do minimal
damage to their credit score, and also simplify your credit
(25:26):
card holdings if you close the right cards and just
do so slowly over time. And actually he mentioned just
kind of letting them sort of close naturally over time,
like if they just slowly like die off. I kind
of like that strategy as well. But just make sure
to keep the cards that you've had the longest around,
keep those active, and keep your credit utilization below that
all important thirty percent mark. And also, Carly Colin, congrats
(25:49):
to you both on getting hitched.
Speaker 2 (25:51):
Yeah, wish we could be there. Wish mac coun perform
the ceremony. You've never done one of those, Matt, but
I would love to see it someday, someday, someday. All right,
let's get to the next question, Matt. This one is
about compounding, and this listener is wondering if there's a
way he can screw up that process.
Speaker 5 (26:07):
Hey, guys, this is Stephen Indy got a question for
you regarding compound interest and how it might relate to
four one k's. The question was actually triggered by your
discussion with Ed Slott. A little background. My wife and
I have over eight hundred thousand in individual traditional for
one k's, and at this point it seems like the
(26:28):
values are being largely driven by the fluctuations of the
market opposed to our individual contributions, which has been considering
halting contributions to the traditional four one k's and actually
transitioning future contributions to ROTH four one k's instead, starting
in twenty twenty five. Just to be clear, I don't
(26:49):
want to rule any money over. It would be only
new contributions that would be going into the ross, and
all the balance that is in the traditionals would remain.
My question is would fun only all future contributions into
the ROTH four one case lessen the possible impact compounding
interest will have on our combined accounts. I imagine most
(27:09):
of us have seen the graphs depicting how the effects
of compounding rocket up and to the right as our
balances get exceedingly larger. So my concern is that since
our ross would be starting at zero, we would be
limiting the benefits the compounding could have provided have we
continued to contribute fully to our traditional four to one case.
(27:29):
To be clear, I'm not asking if you think switching
to a ROTH from the traditional is preferable. I'm simply
curious if this decision would lessen our ability to benefit
from compound interest. Thanks fellas, keep up the great work
and I love your show, Steven, Indy bye.
Speaker 1 (27:47):
So did he say that they have him and his
wife have over eight hundred thousand in which I will
say he said to individual four to one k's, which
confused me for a second because I thought he's going
to start talking about individual retirement accounts, but he's talking
about four one tis the fact that I guess him
and his wife both have for one k's that have
a significant amount of money there in there, which is
really impressive.
Speaker 2 (28:07):
Yeah, and Steve didn't mention how old they are, and
I couldn't tell from his voice. I couldn't tell if
he's like twenty six or if he's like forty six.
I'm guessing he's not twenty six because it'd be practically
impossible to amass that much money in a pour on
k over that period of time.
Speaker 1 (28:19):
Steve is ageless, that is what you're saying, Yeah, an
age of four.
Speaker 2 (28:21):
Well, we just talked Matt about four to one k
millionaires and how it takes about eighteen years if you're
maxing out those accounts to become a four to one
K millionaire. So my guess is, you know, Steve started early,
he went hard, and now he's reaping the rewards because
he's almost at that point.
Speaker 1 (28:35):
Yeah, and I will say, Steve, I love that you're
planning to prioritize those Roth contributions moving forward, because Ed
Slott he's all about it and sorrow. We will make
sure to link to that episode in the show notes.
But that'll offer you some of that tax diversification there
in the future, and you're going to have less of
a essentially that ticking time bomb on your hands. But
that's not your question. What you're talking about is when
(28:55):
it comes to compounding, you want to know if by
moving starting a new account starting at Z or if
you're going to be missing out not at all. And
so let's maybe illustrate this with an example here. Let's
say you've got an account with eight hundred thousand dollars
in it. Let's say you also have another account with
two hundred thousand dollars in it. Sounds like a total
of a million right there. There you go. And then
let's say both of those accounts doubled after seven years,
(29:18):
which is actually that's roughly which you can't expect. Typically,
if that was the case, you would have one point
six million on hand and four hundred thousand respectively for
a total of what two million dollars. Well, if you
had just one account with one million dollars in it
basically got the same starting point, and then that doubled,
well you would also have two million dollars. So what
we're highlighting here is that when you have multiple you
(29:40):
could have one hundred accounts with ten thousand dollars in it.
Do I do my math right? Yeah? And it would
The compounding would still be the same. It doesn't matter
how many times you slice and dice it. It's same
with think a pizza. You can cut it into eight slicus. Yeah,
you can cut it into sixteen, you can even cut
it into thirty two, but it's still the same amount
of pizza overall. And although the pizza's not growing, I
guess in this example, but your retirement accounts are. So
(30:02):
Basically what you're alluding to, Matt here is that the
power of compounding.
Speaker 2 (30:05):
It's not about having everything in one account exactly, It's
about having more dollars at use inside of those investments
to grow for your future. And yes, I think having
fewer accounts can be helpful. Well, that can be helpful
from a simplification process, although it's also not necessary.
Speaker 1 (30:21):
It's all about it all.
Speaker 2 (30:23):
Comes down to having more total dollars growing on your behalf,
and then every time those dollars grow, you've got more
dollars at work for you. And so essentially, no matter
how those dollars are sliced up, the math is the same,
no matter how investments get divided amongst different accounts. So
we would say, yeah, pivot to making roth contributions. That
sound from a tax perspective, it's also sound from a
(30:45):
growth perspective, a compounding returns perspective.
Speaker 1 (30:47):
So I think maybe what's at the heart of the
issue here is he even mentioned this in his question
right where he said that it seems like the majority
of his growth is coming from the fluctuations in the market,
because what he's highlighting here is the fact that well,
what I'm adding to my accounts that really it almost
seems like it has no bearing on the growth or
my total dollar amount that's in there. Yes, one percent,
(31:09):
and so that's where you want to be exactly. I
understand what you're getting at, which is that, well, by
starting with a new account, it seems like there's going
to be less compounding going on. Well, yes, that's true
in that specific account, but we're not talking about that
specific account. We're talking about the total number of dollars
that you have overall, your your investments overall, and so
just keep that in mind because it's all and here's
(31:29):
something else this. I feel like there's a chance here
to play this little psychological trick on yourself, because there
might be a temptation to say, well, why should I
contribute to my four one K? Why should I continue
to invest in my IRA? It hardly does anything at
all to my overall investment amount, and so there could
be a temptation to kind of like let off the
gas a little bit. And that's fine if you got
other goals in life. But what if you instead you said, well,
(31:53):
I want to continue to invest, and I want to
trick myself into thinking I'm having more of an impact
on my overall net worth than I'm actually having. Go
ahead and open separate account, because you're going to see
it go from zero dollars to seven thousand dollars and
the next year you're gonna double that by taking it
from seven to fourteen by your contributions.
Speaker 2 (32:09):
Kind of feels like you're starting from scratch, and I agree's.
Speaker 1 (32:12):
Essentially like you're giving yourself more agency on autonomy over
your overall wealth, when in reality, the dollar amount isn't
the same had you continue to invest that within your
four one K, but the ability, right it is the same. Yeah, Yeah,
but it feels different, Yeah, because you see like the
needle move a little bit more in that specific account.
Speaker 2 (32:29):
And we know howslan psychology is to our ability to
do the right thing right.
Speaker 1 (32:33):
So theoretically this makes sense. I've never tried this, but Steve,
maybe give it a shot and let us know how
this impacts you from a psychological standpoint.
Speaker 2 (32:40):
Yeah, I think in so many ways, pivoting to the
wroth over the traditional right now makes a whole lot
of makes a whole lot of sense for Steve, and
he should put his his fears aside, because no compounding
is going to work the same way, whether you continue
to invest in the same account you've been investing in,
or whether you're gonna move and pivot into a wroth.
And we think there are a lot of benefits of
doing a WROTH. I guess I want to throw this
(33:00):
out there, even tho I think this is highly unlikely.
The only difference you might potentially find, but I think
this is rare is you might get charged a higher
fee for having less money in a particular account. Like
sometimes there are price breaks that a financial advisor might offer,
for instance, if you have over a million dollars in
a single account, but typically that's even that's assets under management,
so it's not about just the single account. It's about
(33:22):
all the money that they're overseeing. But yeah, it's not
like you're going to get a better expense ratio with
Vanguard or Fidelity for having more money with them. Anybody
can get that point oh three percent fee. You don't
have to be special, high income earner, massive investor in
order to get the benefits.
Speaker 1 (33:38):
You're democratized. We all get it. Yeah, So I don't know,
but I'm still thinking about the thing that I mentioned this, Steve.
I feel like there's a way for you to Like,
I just thought of another way to think about it,
which is, like those dollars that you're contributing, they kind
of feel like a big fish in a little pond, right,
and when you talk to people about, hey, what does
it feel like to be wealthier or to be rich?
And a lot of times it's relative. It's like it's
always in comparison to those around you. So I don't
(34:00):
know your positioning starting over and having starting from zero
in that roth ira as a negative, I could potentially
see this as a positive.
Speaker 2 (34:07):
Think you feel maybe kind of like Rudy back in
the movie Rudy, like an underdog. You're the scrappy underdog
who finally makes it in as a defensive end.
Speaker 1 (34:16):
Yeah.
Speaker 2 (34:16):
Like, I think the more and more you've been able
to save, the more you see that your contributions make
less and less of an impact on overall returns. Starting
a new account could make you feel like that scrappy
underdog ready to take on the world again.
Speaker 1 (34:28):
So good point. Yeah, all right, Joel, we got more
to get to. We're gonna discuss pay per mile, car
insurance and more. We'll get to that right after this.
Speaker 2 (34:42):
All right, Matt, we're back for the break. It's now
time for the Facebook question of the week. This one
comes from Jeremy on Facebook and he said, what would
an unrealized capital gains tax mean for my four oh
one k, let's.
Speaker 1 (34:54):
Get into it. Time to talk politics, Joel. Let's let's
try to avoid the worst parts of politics. We are,
of course, in a silly season politically, Matt. I don't
want to harp on politicians very much here, but both
sides of the political spectrum lack substantial policy proposals right now.
There's just not much meat on the bone from either candidate.
(35:15):
And this is a fairly new proposal that we've heard
from a minority of politicians from a certain sect, basically
to say, listen, because we're not getting enough tax out
of certain citizens, why don't we tax them for gains
even though they haven't sold shares or positions. I think
the most important thing to note here, and there's a
(35:35):
couple of things that are important for us to talk about,
is to take this with a grain of salt. First off,
because it's not that this proposal couldn't happen. It's just
that it's highly unlikely in the dysfunctional political environment that
we inhabit. So while people might say, hey, this is
something we're in favor of, and they might even mean it,
it doesn't mean that it's going to happen. Yeah, But
(35:55):
let's say an unrealized capital gains tax law where to pass,
which would be in Congress doing actually something productive. What
would happen to your four one K, Jeremy. Well, nothing,
And that's because this proposal is looking to target fewer
than ten thousand people across the US. And that's because
it would only be required for folks who have a
net worth of one hundred million dollars or more. So
(36:17):
there's a lot of folks talking about this. There are
a lot of individuals getting their painties all caught up
in a wad, and there's I don't know, maybe there's
certainly there's is there a chance that Jeremy falls into
this category dual? Maybe in fact he's one of these folks,
But I would say maybe if that were the case,
he probably isn't spending his time over right.
Speaker 2 (36:33):
Listen, how the money yes faced the crew? Well, you
know what it makes me think of You've been called
the John D. Rockefeller of podcasting, and even you aren't
going to get caught up in this law if it
would have passed.
Speaker 1 (36:41):
Right, So I'm not concerned about it at all.
Speaker 2 (36:44):
So, yeah, Jeremy, maybe you're like loaded have massive dollars
on the line, but it's unlikely. If you're asking us
this question, you probably have high price financial advisors and
hopefully they're not stealing from you behind your back.
Speaker 1 (36:56):
But for everybody else out there who's got let's say
five ten, fifteen thousand dollars in a brokerage account, well,
this isn't going to be something that you're going to
have to actually worry about.
Speaker 2 (37:03):
Well, yeah, well you said five ten, fifteen, even if
you have five ten to fifteen million, because they're saying
those people aren't affected either.
Speaker 1 (37:08):
So even if you said those folks are less likely
to be listened to the podcast, so you got fifteen million.
But even if you get to that point, you're like, listen, now,
I got to the five million point. We got some
listeners out there who might already be there, who probably
already are there, And we've got other listeners who are
well on their way to being a multimillionaire, which is awesome.
That's something worth celebrating. It typically happens over many decades.
But in you make a good point here that this
(37:31):
is all about brokerage accounts, not tax advantaged accounts. So
even if you.
Speaker 2 (37:35):
Were the kind of person who had millions of dollars
in your four one k. It would still remain untouched
even if some sort of unrealized capital gains tax were
to be implemented. And to be honest, this is this
is bad policy. We'd rather see the highest capital gains
tax raised instead, which is another proposal that people on
both sides of the aisle have made to say, listen,
(37:55):
let's make the highest capital gains rate a little more
akin to income tax rates. That I think makes more sense.
But taxing unrealized gains opens up a can of worms.
And then you got to ask the question, well, how's
the government going to handle capital losses in a year
when the stock market goes down or an investment declines
in value. Are they going to reimburse investors in those years?
(38:16):
Chances are no, So this is bad policy, but it's
also unlikely to actually take roots. And even if it
does well, ninety nine point nine percent of pound of
money listeners are going to be completely unaffected. So for you, Jeremy,
I would say these proposals are just more noise in
the new stratosphere that you can safely ignore.
Speaker 1 (38:34):
Nice, all right, we've actually got some time to hear
from another listener. Here's an email from polkit and you wrote,
I recently moved very close to work, and I'm able
to take a bus for the first time in seven
years for a fifteen minute commute to work. I'm talking,
I'm awesome. All these years, my minimum one way commute
has been an hour, so I'm really feeling relaxed about
(38:55):
not having to drive that much for work anymore. I
totally get it. I've been looking into pay per mile
and usage based insurance, but I need your advice on
which one to go for and some good companies that
provide such policies. Here in LA. My annual mileage used
to be around twelve thousand miles, but now it'll be
around three to four thousand miles. I did check in
with my current insurance provider was informed that twelve thousand
miles is the lowest annual mileage they can provide coverage for.
(39:19):
I got some quotes from Progressive All State State Farm.
Their premium is more than what I am currently paying.
There are some companies that show up when I search
Freeway insurance, metro Mile, Nationwide, Smart Miles, but I am
not sure how reliable these companies are. I would love
to hear your thoughts, Joel, what are your thoughts?
Speaker 2 (39:37):
Yeah, I got a few thoughts. First off, can I
just say that bus transportation is underrated?
Speaker 1 (39:43):
Underrated?
Speaker 2 (39:43):
I would love to see more bus transportation in this country.
Makes me think of is it in Colombia? They have
a thriving bus system and you don't think about subway systems, Matt,
How hard they are, how expensive they are to create.
We've got the roads already, Let's just get more people
on b infrastructure is already there. Let's make it more
less expensive.
Speaker 1 (40:03):
It's a part of why light rail always seems I
don't know, you don't want to scoff at it because
it's like, hey, somebody's got a dream and maybe people
will ride it. But it's like, hey, we've already got
the roads, Yes, how do we get more people to
travel via those roads more efficiently? In a bus?
Speaker 2 (40:15):
Think about how many cars it takes off the road
by slamming a much more people into one ride. And
polkit is doing that, It's going to save him money
not just on his car insurance, but on his community
costs of raw and his cost of car ownership. And
it makes so much sense to me that people who
drive less should be able to pay less for insurance, right, Like,
why should the person who drives five thousand miles a
(40:37):
year pay the same as the person who drives fifteen
thousand miles a year. It just doesn't make any sense.
But we've kind of made it one size fits all insurance,
even though Oliver size is fairy.
Speaker 1 (40:47):
You want me to be played Devil's advocate. Sure, Okay,
So I could actually see an argument for someone saying
that it should actually cost more for somebody who drives less,
because insurance is not a cue tael, It's not a consumable.
It's not like you're paying for gasoline, where like the
more you do it, the more you actually consume.
Speaker 2 (41:02):
But the more you drive, the more at risk you
are typically for an accident.
Speaker 1 (41:04):
Statistic Partially, I think, statistically speaking, yes, like people who
drive more are like there is a higher change of
them getting in an accident. But like, practically speaking, I
would dare say that someone who drives less is maybe
a little less experienced on the road versus someone who
drives significantly more. I'm just throwing that out there, Okay,
I can see an argument for I'm not going to
say that if you drive less, actually your premium should
(41:25):
be more expensive. But like, it kind of makes sense
to me why there aren't more folks jumping on this
because it doesn't decline more with how how many fewer miles? Yeah,
because there are other like practically speaking, I do think
that there are other factors at play.
Speaker 2 (41:36):
Well, I will say this, there are companies who do
believe more like I do, and they think that you
should save more if you drive less miles, which is
good to see. Polkit mentioned some of those in his question,
but it's also a relatively new segment of the market
and so you might or might not save money going
with those With those guys, it's worth looking into and
getting quotes. But the amount of money you can save
(41:59):
is tip actually not as much as you would think,
and typically the sub four thousand mileage amount is key
to making pay by the mail. Makes sense, and polkit
fits into that if you're driving much more than that,
you're typically going to find the traditional car insurance. It
still makes the most sense. But I just word of
the wise, Polkit, Yeah, get some get some quotes from
these companies, but be careful and I wouldn't switch unless
(42:22):
it was going to mean substantial savings.
Speaker 1 (42:23):
Yeah, Like, I wouldn't be concerned. Like some of the
companies that are offering these programs, they're legit companies. It's
not like these are new fly by night and around
for like a decade and they actually got I think
they were required recently by Lemonade, which is like a
newer startup. But like all stay nationwide, I'm not worried
about them not necessarily paying out where you defile acclaim. Well,
I think one of the reasons that this is good
to talk through though, is I think there might be
(42:44):
more folks who might qualify for the pay per mile
kind of insurance because of the just working from home. Yeah,
I think there are a lot of folks who would
used to think, well, I'm not I'm not one of
those low mileage gals or fellas. But oh wait a minute.
I used to drive into the office five out of
five days of the week. Now I'm only down to
going in maybe tops two out of five days. Like literally,
(43:05):
you've reduced the miles driven by three fifths. I'm all
for you hopping over there and getting a quote and
seeing what it is that they might charge you. I'm
pointing to the fact that I don't want any stone
to be left unturned here because hey, yes, this did
not used to apply to you, but maybe it applies
to you now. Yeah, if you've changed your habits, oftentimes
you haven't re shopped the things you're paying for. And
you're right, man, a lot of people have changed their
driving habits, and so it's worth at least looking into
(43:27):
and saying, well, how much i've been paying for car insurance? Yeah,
and yeah, shop with the pay by the mile companies,
but also shop with the traditional insurance companies. I would
kind of I think you said it perfectly, leave no
stone unturned when you're when you're doing the shopping. We
just want folks to be open minded because I think
oftentimes so folks can get locked into a way of
thinking and you identify with like, well, I'm just I've
always got the traditional car insurance. Well maybe that's not
(43:49):
something that you need anymore. Maybe hey, maybe you don't
even need a car anymore. Maybe this is something that
you can completely cut from your life. Because I think
it's a really important point too. There's like this threshold
of like, well, I'm actually if I just cut the
miles driven by a little bit more. Well, I can
just rely on Uber or Lyft, maybe I can buy
or whatever. Like, yeah, are actually ways to get around? Yeah,
there are just.
Speaker 2 (44:09):
So many other options out if you reduce your driving enough,
it makes sense to not have a car the world.
You're talking about thousands and thousands of dollars in depreciation
costs and insurance costs and gas costs, I mean all
this stuff, And so then it makes ride share and
rental cars feel like a drop in the bucket compared
to what you were spending. So I think that's another
important point, Polkit like, yeah, you're taking the bus, you're
(44:30):
closer to work, which is awesome, and yeah, you still
need a car on occasion, But are there other ways
to get around than having your own car, Because that
could save you even more money and just means less hassle. Hey,
guess what, you never got to go to the mechanic again,
that car that you're riding around in, it's somebody else's
problem of something breaks, So at.
Speaker 1 (44:45):
Least at least consider that. I think that's totally worth
considering it. Privacy, that's the only other concern because with
a lot of these companies, you have to plug in
the thing in the uh port for them to actually
track your miles, because they don't want you just to say, oh,
I drive a thousand miles a month. Although the ones
that one thousand miles of yeah, although the ones that
don't send you the thing to plug in there. I
saw there's one company and they require you to take
a picture of your odometer to and send I didn't
(45:08):
like at the end of every month, right now, at
the end of every week, which also kind of sounds
like a hassle. But I feel like that that's totally
something that you would do. You're like, it's not the
picture of my phone done. That's easy. I could see
using photoshop to your advantage on that one, Matt, I'm
pretty handy with photo shine. Now that's true. That's cheating, Okay,
don't do it. Just to clarify, I'm not advocating scam
your insurance company at all.
Speaker 2 (45:28):
Dishonest, yes, but these two companies might make sense. I
would if you're gonna save a few bucks, probably not
worth it, and the real money savings might be found
in ditching your car altogether. Now that you've been able
to get those miles down so low. All right, Matt,
let's get back to the beer that we had on
this episode. This one is called the Eleventh Passing. It's
my Burial brewing Company. It is a kitchen sink stout.
(45:50):
What were your thoughts on this one.
Speaker 1 (45:51):
I almost don't know where to start with this because
there are so many different flavors going on. It's got
some nice coffee notes. I'll say. That's like one of
the first things I noticed, and I looked at the bottle.
There's two different types of coffee that they incorporated into
this beer, along with a handful of different like toasted
nuts and vanilla flavoring going on. It's like a ping
pong ball in my mouth. Oh my gosh, dried fruits. Yeah,
this thing is the kitchen sink stout. That's certainly an
(46:14):
app way to put it. They put a lot of
stuff in here. Yeah, but it all melds really nicely together.
I was really good. You mentioned the nuts. It's nutty.
Speaker 2 (46:20):
It's got those toasted macadamia nuts which offer kind of
the sweet nuttiness. It was multifaceted, and it was also
just a big, beastly burly stout. So yeah, I really
I really enjoyed this one. You expect a lot from
Burial in general, but when they come up with like
an anniversary stout, you expected to be next level and
this one.
Speaker 1 (46:39):
Was all right, well, that's gonna be it for this episode.
You can find our show notes up on the website
at howtomoney dot com, where we'll make sure to link
to we mentioned I think at least two previous episodes,
two previous interviews ed Slott as well as Amanda Wolf
during our episode today. We'll link to those as well
as different resources like our credit card tool that's how
toomoney dot com forward slash credit card in order to
(47:01):
find a card that's going to work the best for you,
and how it is that you spend your money and
what it is some of the different rewards that you're
gunning for. So let's go ahead to wrap this up
until next time, Buddy, best Friends Out, Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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